Investment lending, a big fintech business

These are not S/L banks, but investment banks taking time and value deposits and matching them to time and value loans, again on a risk equalized basis.

This is a different matching problem, one I have been avoiding until now. They have a time index in the bids, that is not a natural estimate but derived from a secondary distribution. Then prescribe, by contract, possible variance in principle grants.  That allows a Euclidean, weighted combination of the two variables, as if they were uncorrelated, or risk equalized.

Then go through the sorting and make generators for them that are conformal to each other so summations and ratios work.  Risk equalization, by one time loan fees help out here. Loan fees can be neutral loan risk, spread to all agents; negating much of the default risk.

These businesses are propping up by isolating risk equalized markets. Low transaction costs are key, that means reducing prequal costs, and much of that is greatly eased with smart card tech.  Your contract is simple, at any risk level, we have an investment banker that loans on a term basis.  The transaction costs zero, entry is the loan fee, and optimum market matching with a 3% accuracy in principle guaranteed.

This kind of lending is another in three or four different killer apps that drive the sandbox concept.  The partition let me reference term length error with an exogenous supplied error bound, it keep time out of the bets, keeps liability for time away from the pit boss. Do not automate time bets, time to completion is hidden information.

Time to completion is what?

The shopkeeper has direct control over inventory and pricing. The shop keeper can alter the time needed to return a loan, in secret, based on exogenous events.  She can put some lot on sale, grab the cash pay off a short term debt and turn around and take a long term.  The automated banker is betting time against a player who has no desire to come to agreement, time to completion is an individual hedge, the meaning of it all.

In the high speed S/L banking, all parties keep a deposit and loan, as they wish. The pit boss is working on those ratios, there is no other information on the board. In this case, the account holders snooker the currency banker the old fashion way, they earn it with unexpected productivity.